Quote Originally Posted by paulb
I always imagined this phrase originating when a child asked "May I have some cake?" and was told, "you may have the cake, but you may not eat it."

I can confirm that this is a pretty common proverb in English, so it would be a good one to learn to use. A situation where you would use it would be if you needed both x and y to do something but you could only have one of them. Then you can say "I guess you can't hve your cake and eat it too." Then your friends will shower you with praise for using such marveloud English.
I never liked this proverb. I understand what is meant when it is said, but literally it does not make sense to me.